WME-IMG to Buy UFC for $4 Billion

As a niche sport for those interested in seeing combatants pummel one another in an octagonal cage the Ultimate Fighting Championship seemed for years to be a curio.

However an eye-popping price tag is now commanded by U.F.C. as it has become a global sports empire.

People with direct knowledge of the matter told media that a group led by the talent giant WME-IMG will buy the league for about $4 billion. The announcement of the self sale of the league that promotes mixed martial arts is expected as soon as early next week. Private equity heavyweights Silver Lake, Kohlberg Kravis Roberts, and the investment firm of the billionaire Micheal S. Dell are backing the deal.

The 23-year-old U.F.C.’s fights claims millennials as some 45 percent of its audience, take place in all 50 states of the United States and are now shown in more than 156 countries which highlights the power and reach of the league through the milti billion dollar deal.

A prime source of content, particularly in the digital arena, is presented to the new owners by the league. U.F.C. over all generates roughly 2,000 hours’ worth of material each year, much of it available on its Fight Pass streaming service apart and beyond its headline fights, which the company asserts are the best-selling events on pay-per-view TV.

The U.F.C. just concluded its latest series of fights, perhaps the biggest in the organization’s history and the transaction comes just as U.F.C. does so.

Marred by some controversy, including the absence of stars like Ronda Rousey, Conor McGregor and Jon Jones, the last of whom was removed after testing positive for an undisclosed substance, the event, U.F.C. 200, drew more than 18,000 fans to Las Vegas. Even though still retaining their place in the league as minority investors, for the longtime casino entrepreneurs Frank and Lorenzo Fertitta, the sale will be a windfall for these U.F.C.’s primary owners.

After the promoter spent years and millions of dollars battling to win approval from state athletic commissions, the brothers had bought U.F.C. in 2000 for just $2 million at a low point for the league.

Thanks to a reputation for being just shy of civilized and due to early stars like Royce Gracie and Ken Shamrock, the U.F.C. had begun climbing in popularity before the arrival of the Fertittas.

However former Governor George E. Pataki of New York, who banned the sport from the state and Senator John McCain of Arizona, who derided the sport as “human cockfighting” caused some problem for the league.

With million-dollar losses weighing over the enterprise, the early years under the brothers were still tough. The brothers run the business through a company called Zuffa, the Italian word for “fight”.

But through better distribution through partnerships like the one with Fox, with more advertising and more effective social media marketing, the Fertittas took the brand to a new level. U.F.C.’s revenue was about $600 million last year derived from licensing money for video games, clothes and more began to roll in.

Turning athletes like Chuck Liddell and Randy Couture into mainstream stars, the cross-promotional television programming like “The Ultimate Fighter” reality show elevated U.F.C.’s presence in pop culture. Combatants began appearing on ESPN and in the pages of Sports Illustrated.

(Adapted from CNBC)


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